Marketability test bars excise duty on captively consumed sugar syrup used in biscuit manufacture.

Sugar syrup arising as an intermediate product during biscuit manufacture was not liable to Central Excise duty because marketability was not shown. The Tribunal applied the settled principle that an intermediate product becomes dutiable only if it is marketable in the form in which it emerges. As no evidence established that the sugar syrup was marketable, captive consumption in the factory did not attract duty. The demand and consequential adverse orders could not be sustained, and relief followed in accordance with law.

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Issues: Whether sugar syrup arising during manufacture of biscuits and captively consumed in the factory was liable to Central Excise duty despite the absence of evidence that it was marketable.

Analysis: The Tribunal noted that the issue had already been decided in earlier co-ordinate bench decisions on the same facts. The levy of excise duty on an intermediate product depends on its marketability. On the record, there was no evidence that the sugar syrup, in the form in which it emerged during manufacture, was marketable. In the absence of marketability, the intermediate product could not be subjected to Central Excise duty merely because it was captively consumed.

Conclusion: The issue was decided in favour of the assessee. Sugar syrup captively consumed in biscuit manufacture was held not liable to Central Excise duty.

Final Conclusion: The demand and consequential adverse orders could not be sustained, and the appeal succeeded with consequential relief in accordance with law.

Ratio Decidendi: An intermediate product is chargeable to Central Excise duty only if it is shown to be marketable.

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